Chapter divider slide: Design must be alike to chosen ... · OMV Petrom │ Strategy Update 2021+ │ February 2017 Disclaimer This presentation does not, and is not intended to,

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Sustainable access to energy for everyday modern life

Strategy Update

2021+

February 2017

| OMV Petrom │ Strategy Update 2021+ │ February 2017

Disclaimer This presentation does not, and is not intended to, constitute or form part of, and should not be construed as, constituting or forming part of, any actual offer to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares issued by OMV Petrom S.A. (the Company) or any of its subsidiaries in any jurisdiction or any inducement to enter into investment activity; nor shall this document or any part of it, or the fact of it being made available, form the basis of, or be relied on in any way whatsoever. No part of this presentation, nor the fact of its distribution, shall form part of or be relied on in connection with any contract or investment decision relating thereto; nor does it constitute a recommendation regarding the securities issued by the Company. The information and opinions contained in this presentation and any other information discussed in this presentation are provided as at the date of this presentation and are therefore of a preliminary nature, have not been independently verified and may be subject to updating, revision, amendment or change without notice. Where this presentation quotes any information or statistics from any external source, it should not be interpreted that the Company has adopted or endorsed such information or statistics as being accurate.

No reliance may be placed for any purpose whatsoever on the information contained in this presentation, or any other material discussed verbally. No representation or warranty, express or implied, is given as to the accuracy, fairness or currentness of the information or the opinions contained in this document or on its completeness and no liability is accepted for any such information, for any loss howsoever arising, directly or indirectly, from any use of this presentation or any of its content or otherwise arising in connection therewith.

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This presentation may contain forward-looking statements. These statements reflect the Company’s current knowledge and its expectations and projections about future events and may be identified by the context of such statements or words such as “anticipate,” “believe”, “estimate”, “expect”, “intend”, “plan”, “project”, “target”, “may”, “will”, “would”, “could” or “should” or similar terminology. By their nature, forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company’s control that could cause the Company’s actual results and performance to differ materially from any expected future results or performance expressed or implied by any forward-looking statements.

None of the future projections, expectations, estimates or prospects in this presentation should in particular be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared or the information and statements contained herein are accurate or complete. As a result of these risks, uncertainties and assumptions, you should in particular not place reliance on these forward-looking statements as a prediction of actual results or otherwise. This presentation does not purport to contain all information that may be necessary in respect of the Company or its shares and in any event each person receiving this presentation needs to make an independent assessment.

The Company undertakes no obligation publicly to release the results of any revisions to any forward-looking statements in this presentation that may occur due to any change in its expectations or to reflect events or circumstances after the date of this presentation.

This presentation and its contents are proprietary to the Company and neither this document nor any part of it may be reproduced or redistributed to any other person.


Our vision

Committed to enhance

customer experience

Regional growth leveraging

Romanian expertise

Sustainable access to energy for everyday modern life

Leading integrated

regional player

3


Proven history of integration delivering value

Clean CCS EBIT evolution

Synergies and earnings resilience delivered in depressed oil price environment

Downstream Oil clean CCS EBIT in 2016 up ~3x vs. EUR 85 mn in 2013

2012-2014 Average 2015-2016 Average

Changes in performance contribution reflect market dynamics

94%

6%

4

Brent average

USD 106/bbl

Brent average

USD 48/bbl

40%

60%

Upstream, Downstream Gas and other Downstream Oil


Performance 2012 - 2016

FCF3 average

for the period of

EUR 375 mn

Gearing

maintained

below 10%

Strong track record of capital management

UPSTREAM DOWNSTREAM

OPEX reduced

from USD 15/boe to USD 12/boe

Refinery utilization rate increased

from 73% to 89%

Limited production decline to ~4.7%1

while CAPEX reduced by 45%1

Indicative refinery margins improved

from USD -1.4/bbl to USD 7.0/bbl2

Totea Deep Neptun block

exploration

Modernization of

Petrobrazi refinery

860MW Brazi power

plant on stream

Imp

rove

d o

pera

tio

nal

eff

icie

ncy

Deli

ve

red

on

s

ign

ific

an

t p

roje

cts

1 2016 vs. 2012; 2 Of which modernization of Petrobrazi refinery contributed USD ~5.0/bbl; 3 Free Cash Flow

5


2021+ Centered around three key pillars

Enhancing

competitiveness in

the existing portfolio

Regional

expansion

Developing

growth options

Commitment to deliver attractive shareholder returns

6


Oil and Gas recovery rates

28%

25% 50%

55%

Current 2016 recovery rates

Ultimate recovery rates3

7

Maximize economic recovery

Mature contingent resources through:

infill drilling campaigns

selected field redevelopment programs

Adding ~150 mn boe1 reserves from existing fields

Leading to improved ultimate recovery rates

Key contributor to RRR2 target

Streamline portfolio

Simplify footprint and reduce complexity

Expect production loss of up to 6 kboe/day from 2018

1 Life of field; 2 Reserves Replacement Rate; 3 Life of field including strategic ambitions

Oil Gas

Additional production expected from economic recovery offsets loss from streamlining portfolio

2026 2021

Streamline portfolio

Economic recovery net ~+3 kboe/day

net ~+25 kboe/day

Exploiting potential in existing upstream field portfolio

Current 2016 recovery rates

Ultimate recovery rates3


Relentless pursuit of operating efficiencies

Upstream

Focus on the most profitable barrels

Commitment to operational excellence

Further reduction of unit costs

Modernization and simplification of installations and facilities

Downstream

Capturing of highest integrated operational value

Maximization of availability and utilization of downstream plants

Further improvement of the refinery operations to international benchmarks

Increase in throughput per filling station

Group

Focus on value over volume

Ongoing corporate SG&A1 savings

Agile and efficient organization

Technology driven initiatives

8

1 Selling, General and Administration Expenses


Clear operational targets set

1 Mean time between failures; 2 Total number of facilities modernized by 2016

7.0%

7.6%

8.2%

8.8%

9.4%

70%

80%

90%

100%

2016 2017 2018 2019 2020 2021

750

555

2021 2016

2021 2016

Increase MTBF1 (days)

Modernize facilities (no. of modernized facilities)

9

Utilization Fuels & Losses

2021

50

2016

50

Gas-fired power plants

Wholesalers

End customers

Stable gas sales with greater contribution from end customers (TWh)

Refinery - maintain high utilization and reduce fuels & losses

Do

wn

str

ea

m

Up

str

ea

m

Utilization Fuels & Losses

~300

~400

2


Upstream Digital Oil Field – well automation and online condition monitoring

Drones used for aerial photogrammetry, imaging or videos Automated processes and

optimized predictive

maintenance

Downstream

Predictive Analytics – electronic coordination and management of the

maintenance and operations processes

Smart Aps and Price & Portfolio Optimisation – automated self-service

interface for customers and partners Automated data

processing

Group Digitalized and automated processes Efficient and agile

organization

10

Technology enabling efficiency progression


Mature Neptun Deep opportunity

11

OMV Petrom (50%), ExxonMobil (50%, Operator)

First exploration drilling campaign in 2011 – 2012

Domino-1 well gas discovery: a play opener

Two seismic acquisition campaigns: 2009; 2012 – 2013

Second exploration drilling campaign 2014 - 2016

Seven wells drilled; most of them encountered gas

Successful well test of Domino structure

Committed to assess commercial viability based on

encouraging results

Key contributor to RRR1 target2

1 Reserves Replacement Rate; 2 If commercially viable


Rejuvenated exploration portfolio in Romania

12

Continue to unlock deep onshore opportunities in

existing licenses

Participate in new licensing rounds

Contribution to RRR2 target depending on timing and

results of the new licensing rounds

1 Risked production; 2 Reserves Replacement Rate

Estimated production contribution1

~10 kboe/day

Existing commitments Targeted exploration options

2021


E Videle

850m

Blejesti

1150m

Padina

2650m

Usurei

1600m

Iepuresti

550m

Sierra

2200m

SE

Vulcana

2500m

ToteaS

4400m

Baicoi

Deep

5850m

Ulmu

3360m

Traian N

1600m

Mamu W

4250m

Barbatesti

4800m

Mamu S

4200m

Banesti

4800m

D Batran

4800m

Marina N

2250m

Balteni

4400m

Mamu N

4200m

Mamu E

4300m

Blejesti E

1100m

BulbuceniS

4000m

Prospect

Target depth <3000m

Lead

NFO Prospect Lead

NFO Target depth >3000m

Legend1

13

Strong near-field and exploration opportunities in existing portfolio onshore and shallow offshore

2017 2018 2019 2021+

1 Lead = A possible trap, data being not sufficient to fully map it; Prospect = A specific trap that has been identified and mapped but has not been drilled yet; NFO = near-field opportunity

Readiness to drill


Capture downstream opportunities

Explore value-adding

opportunities for gas

Explore technological

opportunities capitalizing on

skills and assets

Increase integrated value

through refining and retail

investments

Polyfuel project to upgrade production

mix (operative 2019)20

Invest in new retail stations in high

traffic areas

Conclude modernization of fuel

storage network

Finalise last depot modernization in

2018

14


Enhance offer and customer experience

Increase throughput per filling station in Romania

(mn l)

Value for money

Innovation and partnerships to strengthen Petrom and OMV brand positioning

Do

wn

str

eam

O

il

Do

wn

str

eam

G

as

High quality leader

15

2021 2016

4.6 > 5

Develop partnerships Expanding domestic reach

Product innovation


Regional expansion to complement portfolio

Capture synergies with existing operations

~80 mn boe reserves targeted from near-term acquisitions

Prioritise Caspian and Western Black Sea

Downstream Gas

Diversify sales channels for current production (subject to interconnectors development)

Grow regionally with Neptun1 volumes monetization

Upstream

Leverage our local know-how

16

Transport capacities

planned

existing

1 If commercially viable


Portfolio investments EUR ~5 bn cumulative Capex anticipated over 2017 - 2021

Cumulative Capex allocation Upstream portfolio

Maximize value of current mature field portfolio

Secure improved recovery from contingent resources

Deliver further growth in Romania

Drive regional expansion

Downstream portfolio

Continue operational efficiency programs

Build new filling stations

Perform planned turnarounds

Secure long term growth

17

20%

40%

60%

80%

100%

2017 - 2021

Downstream Upstream


Success built on three core strategic enablers

People and Organizational Culture

We are the energy

Sustainability

Respect the future

Technology and Innovation

Innovate for the future

18


Generate positive outcomes for shareholders

Enhanced

profitability

Strong

balance sheet

Attractive

shareholder returns

+ +

19

| OMV Petrom │ Strategy Update 2021+ │ February 2017 20

2021 Clear, robust targets

RRR1

100% by 2021

CAPEX

EUR ~1 bn p.a.

FCF2 after dividends

Positive for majority of period

Clean CCS ROACE3

> 10% by 2021

Gearing

Maintain a strong balance sheet

Dividend

Attractive returns

1 Reserves Replacement Rate; 2 Free Cash Flow; 3 Clean Current Cost of Supply Return on Average Capital Employed


EUR ~900 mn returned to shareholders over 2012-2015

Confidence on 2021+ plan allows improved visibility toward shareholder returns

Considerations 2016 DPS2 proposal: RON 0.015

Commitment to deliver a competitive shareholder return by paying an attractive dividend

Earnings

Oil & Gas prices

CAPEX

FCF and Balance sheet

Stress tested forecasts under various pricing

points and FX assumptions

Upcoming CAPEX

FCF1 generation, cash buffer

Debt structure, potential acquisitions

21

189

347

FCF Dividend

55%

Dividend considerations

3

1 Free Cash Flow; 2 Dividend per share; 3 Executive Board’s proposal subject to approvals of the Supervisory Board and Annual General Meeting of Shareholders

EUR mn

| OMV Petrom │ Strategy Update 2021+ │ February 2017 22

Solid Foundation

Integrated business

model delivers

value through the

cycle

Strong track record

of capital

management

Strong cash

generation

Vision

Provider of

sustainable access

to energy for

everyday modern

life

Capitalizing on

OMV Petrom’s

existing assets and

skills

Defined Execution Plan

Sustainability of

reserves base

Operational

efficiency

Value chain

Customer

experience

Enabled by:

People and

Organizational

Culture

Sustainability

Technology and

Innovation

Clear Strategy

Enhance

competitiveness of

existing portfolio

Develop growth

options

Expand the

regional footprint

Deliver Sustainable Value

Creation

Attractive

shareholder returns

Improved

profitability

Strong balance

sheet

Readiness for new

world of energy

Our path to long-term success


Contact Investor Relations

OMV Petrom Investor Relations

Tel.: +40 372 161 930

E-mail: [email protected]

Homepage: www.omvpetrom.com

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Chapter divider slide: Design must be alike to chosen ... · OMV Petrom │ Strategy Update 2021+ │ February 2017 Disclaimer This presentation does not, and is not intended to,